CFPB opens investigation into PHH
The Consumer Finance Protection Bureau is investigating whether mortgage insurance practices by PHH Corp. (PHH) violated the Real Estate Settlement Procedures Act. PHH said in a Securities and Exchange Commission filing Tuesday the CFPB questions the company's reinsurance business, specifically the exchange for mortgage insurance premiums. The mortgage company said it "has provided reinsurance services in exchange for the premiums ceded" and believes it complies with the law. PHH has not issued reinsurance for any loans originated after 2009. The CFPB launched its investigation earlier in January, PHH said. Jen Howard, a spokeswoman for the CFPB, declined to comment. It's unclear whether PHH faces penalties as part of the investigation, the company said. A PHH spokeswoman said the company is cooperating with the new federal regulator. PHH also announced plans to offer $150 million of senior notes due 2017, to pay off $250 million in notes due in April. Fitch Ratings expects to assign a non-investment grade rating of BB+ on the notes. Analysts also placed PHH's long-term default rating and senior unsecured debt on negative watch. PHH's stock fell more than 6% Tuesday and is down about 60% the last year. Standard & Poor's downgraded PHH's credit and unsecured debt to BB- from BB+ in late December, and raised doubts that PHH could repay another $423 million in debt due in March 2013. The notes issuance and investigation also come less than a week after PHH named Glen Messina president and CEO. He replaced Jerome Selitto, who resigned. PHH, the nation's seventh-largest mortgage lender in 2010, originated $51.9 billion worth of loans in 2011. That's up 6% from $49 billion a year earlier. The company also said in its SEC filing it's pursuing more private-label lending relationships and is "in advanced discussions" with one firm. Write to Andrew Scoggin. Follow him on Twitter @ascoggin.